Treasury Proposes Narrower Premium Tax Credit Rules. Comments Are Due Nov. 30, and Your Marketplace Patients Are Affected.
The Oct. 15 proposal would carry out the 2025 law's limits on Marketplace subsidies: fewer lawfully present immigrants eligible from 2027, verification before credits from 2028 and no cap on paying back excess advance credits. Comments close Nov. 30.
The Treasury Department and the Internal Revenue Service released proposed premium tax credit regulations on Oct. 14, and the proposal was published in the Federal Register on Oct. 15. It would write into regulation the changes that the 2025 reconciliation law, known as the One Big Beautiful Bill Act, made to the credit that subsidizes Marketplace premiums. The American Hospital Association noted that the Department of Health and Human Services plans a parallel proposed rule on Marketplace operations.
Most of these changes come from the statute, not the rule, and several already apply. Treasury estimates the proposed regulations would affect about 15.6 million people enrolled in Exchange coverage, including 13.5 million potentially eligible to claim the credit. For practices, the question is how many of your patients buy coverage on the exchange, and what happens to them, and to your bad debt, if they lose it or face a tax bill.
Who loses eligibility
For taxable years beginning after Dec. 31, 2026, lawfully present immigrants who are not "eligible aliens" under the statute would be excluded from the credit calculation, and the premiums attributable to them would be removed from the computation. Separately, the law ended, for years beginning after Dec. 31, 2025, a rule that let lawfully present immigrants with household income below 100 percent of the federal poverty level claim the credit when their immigration status made them ineligible for Medicaid. The proposal would delete that rule from the regulations.
The proposal also addresses Medicaid's new community engagement requirement. A person found ineligible for Medicaid solely for not meeting that requirement would be treated as eligible for Medicaid coverage, so those months would not qualify for the credit. In practice, a patient who loses Medicaid over a work or activity requirement could not simply move to subsidized Marketplace coverage.
Eligibility rules for a tax credit decide who shows up insured in January, and that change reaches your payer mix before it reaches any report.
Verification and paying it back
For taxable years beginning after Dec. 31, 2027, a month would not count toward the credit unless the Exchange verifies the enrollee's residence and citizenship or lawful presence. Where advance payments are made, it must also verify household income, family size, the absence of other coverage and eligible-immigrant status. Verification would be waived for special enrollment periods triggered by a change in family size, such as a birth, adoption, marriage, divorce or death.
Plans bought during an income-based special enrollment period, one opened only because of where expected income falls relative to the poverty level and not because of a qualifying event, would not count as qualified health plans for the credit. The statute applies this to plan years beginning after Dec. 31, 2025, and the proposed regulatory text to plan years beginning on or after Oct. 15, 2026. The law also removed the cap on repaying excess advance credits for taxable years beginning after Dec. 31, 2025. Treasury estimates that about 3.7 million returns will include a repayment of excess advance credits in 2028.
What practices should do now
Electronic or written comments are due Nov. 30, 2026, under docket REG-101576-26. A telephonic public hearing is set for 10 a.m. Eastern on Dec. 8; outlines from those who want to speak are also due Nov. 30, and the hearing will be canceled if none arrive. Requests to attend are due by 5 p.m. Eastern on Dec. 4. Medical societies are the usual commenters, but a practice can submit a short comment describing its patient mix. Our earlier piece on Medicaid noncitizen eligibility covers a related change.
Ask your billing office what share of visits come from Marketplace and self-pay patients who may be affected, and whether financial counselors can flag renewals, income changes and lost Medicaid coverage before January. Patients whose income rises during the year should report it to the Exchange promptly, since the full excess now comes due at tax time.
Reported, fact-checked and edited by The Script Pad's editorial staff.
This article is for professional education and does not replace clinical judgment. Treatment decisions should be based on the individual patient and current guidelines.
